What's the Role of Private Capital Markets in Europe?

Goldman Sachs Exchanges

Goldman Sachs

Business

4.4 • 1K Ratings

🗓️ 23 April 2019

⏱️ 26 minutes

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Summary

When banks reigned in their lending activities after the global financial crisis, there was a gap in the market as small-to-medium sized businesses had nowhere to go to raise capital that they needed to grow. In this episode, Greg Olafson and Nishi Somaiya of Goldman Sachs' Securities Division discuss how alternative asset managers have filled that gap in Europe through direct lending to middle-market companies. "This form of lending in Europe has evolved and has become an asset class in its own right, to the point where companies now have an option where they go [to raise capital]," Somaiya says. This podcast was recorded on March 6, 2019. This podcast should not be copied, distributed, published or reproduced, in whole or in part. The information contained in this podcast is not financial research nor a product of Goldman Sachs Global Investment Research. Neither Goldman Sachs nor any of its affiliates makes any representation or warranty, as to the accuracy or completeness of the statements or any information contained in this podcast and any liability therefore (including in respect of direct, indirect or consequential loss or damage) is expressly disclaimed. The views expressed in this podcast are not necessarily those of Goldman Sachs, and Goldman Sachs is not providing any financial, economic, legal, accounting or tax advice or recommendations in this podcast. This recording should not be relied upon to evaluate any potential transaction. In addition, the receipt of this podcast by any listener is not to be taken as constituting the giving of investment advice by Goldman Sachs to that listener, nor to constitute such person a client of any Goldman Sachs entity. Copyright 2019 Goldman Sachs & Co. LLC. All rights reserved.

Transcript

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0:00.0	This is Exchanges at Goldman Sachs, where we discuss developments currently shaping markets, industries in the global
0:13.9	economy. I'm Jake Seward, global head of corporate communications here at the firm.
0:18.0	Today we're in our London office talking about Europe's private capital market from what's driving
0:22.4	growth in this alternative asset
0:23.9	class to what sectors and regions throughout Europe are most ripe for innovation to challenges facing
0:29.5	small to medium-sized businesses and much, much more.
0:32.4	We're joined by Greg Olafsen, head of the European Special
0:35.2	Situations Group or SSG as we call it a Goldman, and his colleague Nishi Somaya, head of the private capital
0:41.9	business in the European Special Situations Group.
0:44.7	Greg Anichie, welcome to the program.
0:46.7	Thank you for having us.
0:47.7	So before we dive into specifically what you do every day and the business you're running.
0:53.6	Talk a little bit about the evolution of middle market lending here in Europe and the importance of it
0:58.4	to the overall economy of Europe.
1:00.5	Sure. In order to do that, we need to step back even further back into the beginning of innovation in lending.
1:08.0	And that emanated from the US, I mean back to the Drexel days where high yield was really invented. And the idea was that lenders
1:16.1	would fund companies that perhaps weren't established credits in the traditional sense,
1:21.5	but with a formula that allowed them to get paid for the risk they were taking.
1:27.0	So the high-yield market emerged, innovation took off as it does in America, and that came to Europe.
1:32.8	At the beginning of our careers, we were part of that in the early 2000s here in Europe.
1:37.8	And then you had the global financial crisis.
1:39.6	So you have this kind of secular trend anyways, and then you have this almost catalyst for a much greater need for
	...

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